MGM has hired investment bank Morgan Stanley and law firm Weil, Gotshal & Manges to start studying the idea of the giant tie-up, a gaming source close to the situation said.

No offer is on the table, though, according to sources.

Activist hedge funds, which together own about a 25 percent chunk of underperforming Caesars, have been pushing for an MGM deal, sources said. Caesars shares are off 25 percent year to date, while MGM is down 15 percent.

These funds, including Canyon Partners, which holds leading stakes in both companies, were seen to be behind the ouster of Caesars boss Mark Frissora, who announced last week he was resigning as of Feb. 8.